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The licensed marijuana producer proposed the deal last week and gave the CanniMed board until Friday to respond. Aurora (TSX:ACB) said Monday morning that the board has not replied and it would go ahead with its bid, which it valued at $24 per CanniMed share.

Aurora’s executive vice-president Cam Battley said it was “astonishing” that CanniMed’s board has chosen to ignore its offer.

“We had initially approached them on a friendly basis, and we wanted to make this a collaborative process,” Battley said in an interview on Monday. “But their refusal to acknowledge this generous offer from Aurora means that we’ve decided to go over their heads directly to the CanniMed Shareholders. They’re the ones that will benefit from this.”

Aurora said it has agreements with shareholders representing 38 per cent of CanniMed’s outstanding shares to support its bid, which it says represents a 56.9 per cent premium to CanniMed’s closing price prior to its proposal. Aurora intends to commence the hostile bid this week, mailing a circular to registered shareholders.

The offer follows an announcement by CanniMed on Friday that it struck an all-stock deal to acquire marijuana company Newstrike Resources Ltd.

Under the Newstrike deal, shareholders of the company (TSXV:HIP) will receive 0.033 CanniMed shares (TSX:CMED) for each Newstrike share held. The companies valued the offer at 50.5 cents per share, based on CanniMed’s share price on Nov. 14 before it disclosed it was in talks to acquire Newstrike, which is backed by The Tragically Hip.

CanniMed shareholders would own approximately 65 per cent of the combined company, while Newstrike shareholders would hold the remaining 35 per cent.

Aurora called CanniMed’s acquisition announcement “extremely troubling” in light of its offer presented to CanniMed’s board on Nov. 13.

“At no point did CanniMed try to engage or otherwise entertain discussions with Aurora regarding the significant offer that had been presented to their Board for CanniMed shareholders prior to entering into the Newstrike Resources agreement,” the company said in a statement Monday.

The Newstrike offer “should be considered oppressive to CanniMed shareholders,” it added.

Battley called the $9.5-million break fee to be paid by CanniMed to Newstrike a “poison pill” tactic.

The transaction is subject to approval from shareholders of both companies during special meetings.

CanniMed president and chief executive Brent Zettl said Monday that Newstrike is “our optimal partner” as it looks to participate in the recreational marijuana market, with the July 2018 deadline set by the federal government for its legalization rapidly approaching.

Zettl, who would not speak about Aurora during its conference call to discuss the Newstrike transaction, said this was CanniMed’s “initial step” to broaden beyond medicinal cannabis.

“We are bringing on board an iconic, recognized brand associated with The Tragically Hip that will have a definite place in the recreational market,” he said.

Shares of Aurora rose roughly 6 per cent to close at $5.85 in Toronto. Shares of the marijuana producer are up more than 90 per cent since Nov. 1.

Meanwhile, shares of CanniMed closed at $19.71, up more than two per cent, while shares of Newstrike rose nearly 12 per cent to close at $0.57 on the TSX Venture Exchange.

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